Here's How And Where Philadelphia Will Try To Get Amazon's HQ2

Amazon’s search for a city to host its HQ2 set off a mad dash for officials to put together proposals wooing the e-commerce giant and its estimated 50,000 jobs.

In addition to mandating a metro area population of at least 1 million people, Amazon’s request for proposals laid out its requirements for any potential site:

• No more than a 45-minute drive from an international airport, with direct flights to Seattle and Washington, D.C.
• No more than 30 miles from the main population center.
• No more than two miles from major highways. Direct, on-site access to mass transit.
• Able to accommodate up to 8M SF of office in the next 15 to 20 years.

More general requirements included a sizable, educated workforce, functional citywide mass transit, and most crucially, a package of tax and financial incentives to ease the financial burden for Amazon. With plenty of cities filling the minimum of specifics laid out above, it seems likely that a main differentiator will be however a state or city can sweeten the pot for the multibillion-dollar company.

Philadelphia and its officials know that all too well, and are planning to move heaven and earth to put together a competitive financial package, despite limits on state programs. But those limits were put in place before anyone could conceive of a potential business resident the size of Amazon’s HQ2.

“[State and city tax credits and loan programs are] based on the number of jobs created and projected investment, which Amazon would probably exceed the allowed amount for,” City of Philadelphia Senior Deputy Commerce Director Duane Bumb told Bisnow. "But in this case, we’d work closely with the state to identify if there are additional financial tools that could be made available, such as capital grants, low-interest lending or something that could serve a large development program."

Bumb is part of the team of Philadelphia officials putting together the proposal for Amazon, and he stressed how early in the process they are. He has, however, been part of previous attempts to lure companies to Philadelphia, although on a much smaller scale.

Philadelphia has two programs meant to offset the cost of development that would be relevant to Amazon: its 10-year tax abatement on all new construction and designated Keystone Opportunity Zones, a further abatement of all business taxes meant to goose development in certain areas. One KOZ is perhaps the most likely target in the city for HQ2.

The Navy Yard more than meets the required square footage available for development, both with former industrial buildings to renovate and open space to build from the ground up.

“The Navy Yard really is the size of all of Center City, so it’s a huge piece of real estate,” Bumb said. “Amazon said that if it was in a greenfield location, they’d expect a larger footprint because the building’s scales would be lower, but the Navy Yard has tremendous land capacity to absorb 8-10M SF of commercial development, and to build at sizable scale.”

The Navy Yard, as of now, would be all but disqualified due to a lack of on-site public transit options, but its tenants and developers have been clamoring for a Broad Street Line extension since the area started its rebirth as an office complex. If Amazon makes noise about getting on board, that would likely grease the wheels considerably. As is, a shuttle takes Navy Yard employees to and from Center City, with service that could easily be expanded.

Schuylkill Yards is the other complex that jumps to mind for those considering Amazon’s RFP, with its proximity to 30th Street Station, the Market-Frankford Line, and of course the University of Pennsylvania and Drexel University. The first phase has only just broken ground, however, and initial plans call for only 5M SF meaning integration with another nearby project is likely required.

“The areas immediately near Penn and Drexel will be incredibly important in recruiting Amazon, and they would appear to have capacity for much, if not all, of Amazon’s development,” Bumb said. “Because the building requirement is so large, and because of Amazon’s track record of establishing multiple-building HQs in a downtown setting, the idea that everything’s in walking distance could be achieved in University City, whether it’s on one site or multiple nearby sites that fit together in a compelling way.”

Schuylkill Yards is one part of the 50-year 30th Street Station District Plan, which extends over the Amtrak rail yards north of University City. Perhaps if Amazon is patient, it can take some of that space. If not, University of the Sciences’ uCity Square project could possibly accommodate what Schuylkill Yards cannot at full build-out. It would require a collaboration of a significant number of players, but representatives for all of University City’s institutions have spoken of a shared interest in the area’s growth, rather than a cutthroat competition for business.

Schuylkill Yards developer Brandywine Realty Trust is aware of the need for collaboration and is no stranger to recruitment efforts for businesses.

“Pennsylvania and the City of Philadelphia need to work together to develop a proposal and a strong, pro-growth program that represents Philadelphia well," Brandywine CEO Jerry Sweeney said in a statement. "Brandywine looks forward to working with officials to help drive this message and hopefully make Philadelphia Amazon's new home."

Beyond Schuylkill Yards and the Navy Yard, there are other options in the city and beyond for a campus the size of HQ2, but all would require an effort similar to, or greater than, bringing together University City’s players. Bumb speculated that groupings of lots in North Philadelphia off the BSL or along the Delaware River waterfront would have the requisite square footage, and others have suggested Grays Ferry, already home to Pennovation Works.

“There’s not a requirement for the site to be publicly controlled, but the sites have to be assembled under unified ownership,” Bumb said. “Having a qualified developer who’s accomplished controlling a large site would be a compelling part of a proposal.”

No matter what Philly decides would be its best foot forward, it will be part of a hotly contested field of candidates. More will be known about where the city’s financial incentive package stacks up next to its competitors by the time proposals are due on Oct. 19, and many residents can only hope that if Philly’s is picked, it will not be at too great a cost to the city and state's bottom line.

As for nonfinancial incentives, Philadelphia is a strong candidate. The aforementioned talent pool and transit system, combined with a reasonable cost of living and a vibrant cultural and food scene are all factors, but Philly’s location may be its biggest advantage.

“The proposal sets a requirement for direct flights to key cities, which include Washington and New York,” Bumb said. “In Philly’s case, you can get there before you can get through the airport in other cities.”

Whatever Philadelphia includes in its proposal, it will be selling itself against virtually every other major city in North America. Like the others, Philly will be emphasizing its eagerness to work with Amazon and respect for the company’s attitude and history. There is a reason Amazon gave so much specific information about its Seattle HQ, after all.

“We will want to be clear on how we believe that Philly is aligned with Amazon’s core values, and in some respects, to the extent that they’ve grown in a downtown setting, we will want to compare ourselves to that sort of culture,” Bumb said. “If that is a model that’s successful for Amazon, it can be successful here.”